TMI Blog2012 (8) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... that:- AO rightly computed the income of the assessee as per original return in which notice u/s. 143(2) has been validly issued and as such, there was no need to issue any further notice u/s. 143(2) on the invalid revised return filed on 29.12.2008 which was also not taken into consideration by the AO while framing the assessment in the matter. Considering the totality of facts and circumstances, we are of the view that the notice u/s. 143(2) has been correctly issued in this case on the original return of income, on the basis of which the assessment order has been framed by the AO. May be, the AO has wrongly mentioned section 147 in the body of order would not make the assessment order u/s. 143(3) as invalid. - Decided against the assessee. - ITA No. 131/Agra/2010 - - - Dated:- 31-5-2012 - SHRI BHAVNESH SAINI, SHRI A.L. GEHLOT, JJ. Revenue by : Shri Waseem Arshad, Sr. D.R. Assessee by : Shri Navin Gargh, Advocate ORDER Per Bhavnesh Saini, J.M.: The departmental appeal and the cross objection by the assessee are directed against the order of ld. CIT(A), Gwalior dated 24.02.2010 for the assessment year 2006-07. 2. We have heard the ld. represent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .26,21,640/- Rs.28,20,240/- 4.1 While making the above additions, the AO has mentioned as under : From schedule B of balance sheet enclosed with the return of income filed for A.Y. 2006-07 on 30.10.2006 it was noticed that there was a liability of Rs.26,71,640/- in the name of M/s. Satnam Trading Co., as sundry creditor. Vide letter enclosed with the notice u/s. 142(1) dated 10.06.2008 assessee was asked to furnish complete address and copy of account of M/s. Satnam Trading Co. in whose name credit of Rs.26,21,640/- was outstanding as on 31.03.2006. In compliance to this query assessee submitted copy of account of M/s. Satnam Trading Co., appearing in his books of accounts for F.Y. 2005-06 in which total purchases of Ghee of Rs.62,61,350/- has been shown and credit balance of Rs. 26,21,640/- has been shown as on 31.03.2006. In order to verify the genuineness of transactions made with M/s Satnam Trading Co., letter u/s. 133(6) was issued to the above firm on 12.09.2008 by registered post and in compliance to this letter reply was received on 06.10.2008 through speed post enclosing therewith a copy of ledger account of assessee's firm appearing in his books of accounts for F.Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.2,00,000/- 6 15.02.2006 Ch. No. 748255 Rs.3,00,000/- 7 16.02.2006 Ch. No. 748257 Rs.1,40,000/- 8 21.02.2006 Ch. No. 748258 Rs.2,00,000/- 9 23.02.2006 Ch. No. 748259 Rs.10,00,000/- 10 28.02.2006 Ch. No. 748261 Rs.2,50,000/- 11 02.03.2006 Ch. No. 748262 Rs.2,00,000/- 12 20.03.2006 Ch. No. 748264 Rs.1,00,000/- 13 22.03.2006 Ch. No. 748266 Rs.2,00,000/- In response to letter dated 05.12.2008 the Branch Manager, Indus Ind Bank Gwalior supplied the required information vide letter dated 12.12.2008. In the said letter it has been mentioned that payment of cheques mentioned at S.No. 1 to 8 totaling Rs. 18,40,000/- has been made in cash and cheques mentioned at S.No. 9 to 13 totaling Rs. 17,50,000/- has been credited in the bank account of M/s Satnam Trading Co. From the information gathered from bank, it is seen that assessee has made cash payment of Rs.18,40,000/- to M/s. Satnam Trading Co. on different dates as mentioned above. From the photocopies of cheq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Hukum Chand Ahuja because of his illness and remained out of station for treatment. This offer was made surrendering the amount subject to no penalty. The assessee had made conditional disclosure and fulfilled it by disclosing this income in revised return and paid taxes but the AO did not follow his offer and initiated penalty proceedings u/s. 271(1)(c) of the IT Act. It was submitted that the query letters u/s. 133(6) were issued to M/s. Satnam Trading Company for verification of the transaction and the said party replied the letter by post and confirmed the total sales and balance amount. The written reply of wife of the concerned party was also received mentioning that Shri Hukum Chand Ahuja is suffering from cancer and diabetes and mentally sick and has gone for treatment. Since the assessee furnished complete details and the party also furnished confirmation, therefore, no addition should be made against the assessee of the entire amount in case of M/s. Satnam Trading Co. It was submitted that the AO was not justified in treating the transactions as bogus for not producing the supplier for examination. Since the sales have been accepted, the purchases should not be trea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Ahuja is found to be person of inadequate means. 6.3 However, on the basis of submissions of the appellant and perusal of records, I tend to agree with the appellant that first of all, the A.O. could not have trated the entire amount of purchases with Satnam Trading Co. as bogus when the sales of the appellant along with closing stock and other details have been accepted by the A.O.. The appellant has also produced copy of Income tax return of Shri Kukum Chand Ahuja for the asstt. Year under consideration which has been filed on 11.05.2007 declaring income of Rs.94,000/-. As per trading account of M/s. Satnam Trading Co., sales of Rs.73,52,835/- have been declared. Also the Inspector s report which has not been made available to the appellant for cross examination, cannot be relied in toto, as the transactions have taken place during the financial year 2005-06 whereas the Inspector has given his comments in the report on 19.12.08. Further, the mere fact that some bearer cheques contained the signature of the partner of the firm does not automatically mean that the same have been encashed by the appellant, since the same cheques also carry the stamp and signature of M/s. Satna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplied - Assessee not given an opportunity to explain or rebut it - order liable to be set aside . He has submitted that since the sale has not been disputed, therefore, purchases cannot be disputed. He has, therefore, submitted that the ld. CIT(A) rightly deleted the addition of Rs.36,39,710/-. As regards the addition of Rs.28,20,240/-, he has submitted that though the assessee made surrender of these amounts in statement recorded during the course of survey on 26.12.2008 (PB-31), but there was no material against the assessee for making the surrender. He has referred page 44 and 45 of the PB, which is statement of assessee to explain the above issue. He has submitted that though the assessee made surrender of aforesaid amount in the revised return filed on 29.12.2008 (PB-48), but it was conditional surrender that the AO would not levy penalty, but the AO later on initiated penalty proceedings against the assessee. Therefore, the assessee retracted from statement by filing affidavit before the ld. CIT(A) on 07.01.2010. He has, therefore, submitted that further addition made by the AO and confirmed by the ld. CIT(A) should also be deleted. 6. We have considered the rival submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with these parties and in order to buy peace, he agreed to surrender the amount in question in respect of these parties. It is, therefore, clear that at the time of survey the assessee was not in a position to explain the transactions with these parties of the aforesaid amount and had not produced any sufficient evidence before the AO in this regard. Further, these amounts were standing against these parties, which are considered as fictitious liabilities created by the assessee firm by introducing his own money. The AO on verification of the accounts of M/s. Ridhi Sidhi Containers Pvt. Ltd. also found that there was a difference in the amounts and therefore, the assessee was asked to explain the amount in question. The assessee has, however, failed to explain the same. Therefore, the liabilities standing the names of these two parties in the books of assessee were treated as fictitious liability. The same were not explained during the statement recorded in the survey proceedings also. Therefore, the assessee voluntarily agreed to surrender the entire amount for the purpose of taxation and the assessee immediately after recording of the statement during the survey also filed revis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action is, therefore, not valid and the assessee cannot be permitted to deny the statement made in the course of survey. Further, the assessee has already made surrender of amount and paid taxes voluntarily and the assessee cannot be allowed to withdraw the amount, on which taxes have already been paid voluntarily. Considering the totality of the facts and circumstances, we do not find any justification to interfere with the order of the ld. CIT(A) in confirming the addition of Rs.28,20,240/-. As a result, ground No. 1 of cross-objection of the assessee is dismissed. 7. The assessee, on ground No. 2 of the cross objection, challenged the order of the ld. CIT(A) in upholding the assessment proceedings without issue of notice u/s. 143(2) of the IT Act. In this case, the return of income has been filed by the assessee on 30.12.2006 and notice u/s. 143(2) was issued on 14.09.2007, which was served upon the assessee on 11.10.2007. Therefore, the notice u/s. 143(2) was validly issued and served on the assessee within the period of limitation. The assessment proceedings were going before the AO since 14.09.2007, which is also noted in the order sheet, copies of the entire order sheets h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim of assessee because there was a distinction in the proceedings u/s. 143 and 147 of the IT Act. In such circumstances, there is no need of any interference. 9. We have considered the rival submissions and the material on record. It is not in dispute that the assessee filed original return of income on 30.10.2006 declaring nil income. The notice u/s. 143(2) was issued on 14.09.2007 which was served upon the assessee on 11.10.2007 and also participated the proceedings before the AO within the time prescribed. It is, therefore, not in dispute that the AO validly issued notice u/s. 143(2) and validly proceeded to frame the assessment in the case of the assessee. Copies of order sheet are filed in the paper book at pages 100 to 104 in which the AO conducted assessment proceedings on various dates and ultimately computed income of the assessee by closing the enquiries and investigation on 31.12.2008. The AO also passed consequent assessment order on 31.12.2008 and determined the income of assessee at Rs.63,36,406/- and started the computation of income with net profit declared as per profit loss account at nil and after making additions, subject matter in appeal above and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the AO completed the assessment order only on 31st December, 2008. Therefore, the surrender was regularized for the benefit of Revenue Department, as it is well settled law that the proceedings u/s. 148 are for the benefit of the Revenue and not the assessee. Therefore, such surrender of income additionally would have no impact on the original return of income filed by the assessee. Since the entire order sheets did not contain taking of the cognizance by the AO of the invalid return, we are of the view that the AO rightly computed the income of the assessee as per original return in which notice u/s. 143(2) has been validly issued and as such, there was no need to issue any further notice u/s. 143(2) on the invalid revised return filed on 29.12.2008 which was also not taken into consideration by the AO while framing the assessment in the matter. Considering the totality of facts and circumstances, we are of the view that the notice u/s. 143(2) has been correctly issued in this case on the original return of income, on the basis of which the assessment order has been framed by the AO. May be, the AO has wrongly mentioned section 147 in the body of order would not make the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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